OPEC Hits Summer Slump on Oil-Cut Goals

By Brian WingfieldBrian Wingfield, Samuel DodgeSamuel Dodge and Cedric SamCedric Sam

OPEC’s effort to end a worldwide glut seems to be flagging. For the second straight month, the group’s compliance with agreed production cuts stayed below 90 percent, as nations including Saudi Arabia pumped slightly more crude, and others, such as Iraq and Algeria, still haven’t trimmed as much supply as promised. A parallel effort by some non-OPEC countries also struggled in July.

OPEC Cuts Don’t Meet Target

Thousands of barrels a day
Cutback reached target
Cutback did not reach target
OPEC nations
Target: 1,164
July86%
1,004
June84%
978
May109%
1,269
April104%
1,216
March109%
1,264
Feb.97%
1,125
Jan.99%
1,153
Non-OPEC nations
Target: 558
July73%
410
June81%
453
May79%
441
April79%
441
March63%
354
Feb.31%
175
Jan.53%
295
Sources: Bloomberg, IEA estimates are used for non-OPEC nations and Equatorial Guinea. OPEC secondary-source estimates used for all other OPEC members. Includes revised data

The 21 nations participating in supply cuts are collectively trying to reduce output by almost 1.8 million barrels a day, in most cases using October levels as the starting point. Iran was allowed to boost production slightly, while OPEC members Libya and Nigeria are exempt. Russia is responsible for more than half of the non-OPEC curbs.

Which Countries Achieved Their Output Cut Target in July?

Six of 21 countries involved reached their target

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Mexico

Sudan

Oman

Brunei

Venezuela

South

Sudan

Ecuador

Equatorial Guinea

Malaysia

Gabon

Angola

Cutback reached target

Cutback did not reach target

Non-OPEC nation

South America

Mexico

Venezuela

Ecuador

EMEA

Russia

Kazakhstan

Azerbaijan

Kuwait

Iraq

Bahrain

Algeria

Qatar

Saudi

Arabia

U.A.E.

Sudan

Oman

Equatorial

Guinea

South Sudan

Gabon

Angola

Asia

Russia

Kazakhstan

Brunei

Malaysia

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Brunei

Sudan

Oman

Venezuela

Mexico

Equatorial Guinea

South

Sudan

Ecuador

Malaysia

Gabon

Angola

Cutback reached target

Cutback did not reach target

Non-OPEC nation

Russia

Kazakhstan

Azerbaijan

Iraq

Kuwait

Bahrain

Algeria

Saudi

Arabia

Qatar

U.A.E.

Mexico

Brunei

Sudan

Oman

Venezuela

Equatorial Guinea

South

Sudan

Ecuador

Malaysia

Gabon

Angola

Note: OPEC members Iran, Libya and Nigeria are allowed to boost output

In early August, some nations participating in the supply cuts met to shore up support for improving compliance. OPEC made 86 percent of pledged reductions in July, versus 84 percent in June, revised data from the group show. Non-OPEC compliance fell to 73 percent, from 81 percent, according to Bloomberg calculations using International Energy Agency data. Venezuela, Angola, Kuwait and Mexico are achieving their promised cuts the most, on a percentage basis, as well as smaller producers Brunei and Equatorial Guinea.

July Crude Oil Production

Thousands of barrels a day
Cutback reached target
Cutback did not reach target
Non-OPEC nation
  • 10,950
    Russia
  • 10,067
    Saudi Arabia
  • 4,468
    Iraq
  • 3,824
    Iran
  • 2,905
    U.A.E.
  • 2,703
    Kuwait
  • 1,997
    Mexico
  • 1,932
    Venezuela
  • 1,768
    Kazakhstan
  • 1,646
    Angola
  • 1,059
    Algeria
  • 969
    Oman
  • 797
    Azerbaijan
  • 644
    Malaysia
  • 619
    Qatar
  • 536
    Ecuador
  • 205
    Gabon
  • 191
    Bahrain
  • 157
    Eq. Guinea
  • 122
    S. Sudan
  • 110
    Brunei
  • 73
    Sudan
Sources: Bloomberg, IEA estimates are used for non-OPEC nations and Equatorial Guinea. OPEC secondary-source estimates used for all other OPEC members.

Saudi Arabia has borne the brunt of OPEC’s production cuts for most of the year, but its compliance with the curbs slipped to 98 percent last month, OPEC secondary-source data show. Iraq, the group’s next largest producer, made 44 percent of its pledged cuts in July. OPEC revised its June data to show higher production in nations that included Saudi Arabia and the United Arab Emirates.

By How Much Did Countries Reduce Crude Production?

Thousands of barrels a day
Target
Cutback reached target
Cutback did not reach target
Non-OPEC nation
  • Saudi Arabia
    −486
    −477
  • Kuwait
    −131
    −135
  • Venezuela
    −95
    −135
  • U.A.E.
    −139
    −108
  • Angola
    −78
    −105
  • Iraq
    −210
    −93
  • Eq. Guinea
    −12
    −38
  • Algeria
    −50
    −30
  • Qatar
    −30
    −29
  • Ecuador
    −26
    −12
  • Gabon
    −9
    +3
  • Russia
    −300
    −279
  • Mexico
    −100
    −106
  • Oman
    −45
    −43
  • Azerbaijan
    −35
    −17
  • Brunei
    −4
    −15
  • Bahrain
    −10
    −6
  • Sudan
    −4
    −3
  • Malaysia
    −20
    +6
  • S. Sudan
    −8
    +18
  • Kazakhstan
    −20
    +73
Sources: Bloomberg, IEA estimates are used for non-OPEC nations and Equatorial Guinea. OPEC secondary-source estimates used for all other OPEC members.

Russia, the largest producer in the non-OPEC group, in recent months has made more than 90 percent of the output cuts it pledged, IEA data show. Mexico in July cut crude production by more than agreed. Kazakhstan, the cohort’s third-largest producer, boosted output last month and remains well off target, though it affirmed its commitment to the accord in early August.

Price and Production

Crude stuck near $50 a barrel
Brent crude oil price as of
Total OPEC production (thousands of barrels a day)
Sources: Bloomberg, ICE Futures Europe

Global benchmark Brent crude in recent weeks has held above $50 a barrel, recovering from a dip in June. The rebalancing of the oil market “has been a stubborn process and it takes time,” the IEA said in its most recent monthly report. For higher prices to stick, those cutting supply “need to convince the market that they are in it together,” the Paris-based agency said. Risks to that effort include rising output in Libya and Nigeria as well as shale-oil producers in the U.S.